In Off the Books, Sudhir Venkatesh offers us a compelling and nuanced look at the underground economy in the South Side of Chicago. His key insight is that the boundaries between the “legitimate” and “illegitimate” economy is blurred. He notes that legitimate businesses often engaged in illicit practices to supplement licit income:

Some, like Ola Sanders, are well-known proprietors whose businesses have suffered in recent years. They cannot resist the opportunity for immediate cash to supplement their legitimate earnings. So they rent out their space to a gang or another underground trader. They develop creative hustling schemes and do not report their income. They might even exchange services with each other off the books, letting barter replace taxable income altogether.

What struck me about Venkatesh’s description of the economy of the South Side neighborhood he studied was how much it mirrored my own experiences growing up in a Cuban-American enclave in Hialeah, Florida, a suburb of Miami. When compared to Blacks, Cuban Americans are often considered a “model minority,” but Venkatesh’s work could just as easily apply to my neighborhood where “hustling” was an essential part of the local economy.

This is the house I grew up in. Most of the houses on my block have “efficiency” apartments that homeowners would rent out in violation of city zoning laws. Many people in my neighborhood operated businesses out of their homes without licenses. It wasn’t unusual for people to have “free cable” or suspiciously cheap electronic goods in their homes. Nor was it unusual for people to get “arreglos” (fixes) from “gente de confianza” to get insurance companies to pay for hurricane damage that never happened or car repairs that were not caused by accidents.

Despite the fact that all this was going on, the people engaged in these exchanges were good folks who went to church, raised good children, and build a vibrant and thriving community. I appreciate Venkatesh’s perspective in describing the South Side economy he studied:

Despite the moralizing of some, we cannot truly understand the “shady” economy if we see it as a dirty, lawless world of violence and disrepute, one that tarnishes an otherwise pristine sphere where everyone pays their taxes, obeys the laws, and turns to the government to solve disputes and maintain order.

I could just be sympathizing with “my people,” but part of what I think is going on with these exchanges is not simply a lack of jobs in the inner city, but a lack of trust in the rule of law. In the example of my community, my family were Cuban exiles fleeing communism. This set of early exiles constituted an entrepreneurial class. This group, for good or ill, had strong anti-statist views. They perceive government to be corrupt and predatory. As a result, many people I’ve talked with in my old neighborhood see government as something to “get around.” At the same time, they were and are very pro-American and defend American ideals like the rule-of-law.

What do you think about underground economies. Are the things I described unethical? Are we in a position to moralize? Does any of this mirror your own experiences?